2. Replacement of Fixed Capital in Natura
We assumed hitherto a) that £1,000 paid in wages by I are spent by the labourers for IIC to the same amount, i. e., that they buy articles of consumption with them.
It is merely a statement of fact that these £1,000 are advanced by I in money. Wages must be paid in money by the respective capitalist producers. This money is then spent by the labourers for articles of consumption and serves the sellers of the articles of consumption as a medium of circulation in the conversion of their constant capital from commodity capital into productive capital. True, it passes through many channels (shopkeepers, house owners, tax collectors, unproductive labourers, such as physicians, etc., who are needed by the labourer himself) and hence it flows only in part directly from the hands of labourers I into those of capitalist class II. Its flow may be retarded more or less and the capitalist may therefore require a new money reserve. All this does not come under consideration in this basic form.
b) We assumed that at one time I advances another £400 in money for purchases from II and that this money returns to it, while at some other time II advances £400 for purchases from I and likewise recovers this money. This assumption must be made, for it would be arbitrary to presuppose the contrary, that capitalist class I or II should one-sidedly advance to the circulation the money necessary for the exchange of their commodities. Since we have shown under subtitle 1 that one should reject as absurd the hypothesis that I would throw additional money into the circulation in order to turn 200 IIc(d) into money, it would appear that there was left only the seemingly still more absurd hypothesis that II itself was throwing the money into circulation, by which that constituent portion of the value of its commodities is converted into money which has to compensate the wear and tear of its fixed capital. For instance that portion of value which is lost by the spinning-machine of Mr. X in the process of production re-appears as a portion of the value of the yarn. The loss which his spinning-machine suffers in value, i. e., in wear and tear, on the one hand, should accumulate in his hands as money on the other. Now supposing that X buys for example £200 worth of cotton from Y and thus advances to the circulation £200 in money. Y then buys from him £200 worth of yarn, and these £200 now serve X as a fund to compensate the wear and tear of his machine. The thing would simply come down to this — that X, aside from his production, its product, and the sale of this product, keeps £200 in petto to make good to himself the depreciation of his spinning-machine, i. e., that in addition to losing £200 through the depreciation of his machine, he must also put up another £200 in money every year out of his own pocket in order to be able eventually to buy a new spinning-machine.
But the absurdity is only apparent. Class II consists of capitalists whose fixed capital is in the most diverse stages of its reproduction. In the case of some of them it has arrived at the stage where it must be entirely replaced in natura. In the case of the others it is more or less remote from that stage. All the members of the latter group have this in common, that their fixed capital is not actually reproduced, i. e., is not renewed in natura, is not replaced by a new specimen of the same kind, but that its value is successively accumulated in money. The first group is in quite the same (or almost the same, it does not matter here) position as when it started in business, when it came on the market with its money capital in order to convert it into constant (fixed and circulating) capital on the one hand and into labour power, into variable capital, on the other. They have once more to advance this money capital to the circulation, i. e., the value of constant fixed capital as well as that of the circulating and variable capital.
Hence, if we assume that half of the £400 thrown into circulation by capitalist class II for exchange with I comes from those capitalists of II who have to renew not only by means of their commodities their means of production pertaining to the circulating capital, but also, by means of their money, their fixed capital in natura, while the other half of capitalists II replaces in natura with its money only the circulating portion of its constant capital, but does not renew in natura its fixed capital, then there is no contradiction in the statement that these returning £400 (returning as soon as I buys articles of consumption for it) are variously distributed among these two sections of II. They return to class II, but they do not come back into the same hands and are distributed variously within this class, passing from one of its sections to another.
One section of II has, besides the part of the means of production covered in the long run by its commodities, converted £200 in money into new elements of fixed capital in natura. As was the case at the start of the business, the money thus spent returns to this section from the circulation only gradually over a number of years as the wear and tear portion of the value of the commodities to be produced by this fixed capital.
The other section of II however did not get any commodities from I for £200. But I pays it with the money which the first section of II spent for elements of its fixed capital. The first section of II has its fixed capital value once more in renewed natural form, while the second section is still engaged in accumulating it in money form for the subsequent replacement of its fixed capital in natura.
The basis on which we now have to proceed after the previous exchanges is the remainder of the commodities still to be exchanged by both sides: 400s on the part of I, and 400c on the part of II.52) We assume that II advances 400 in money for the exchange of these commodities amounting to 800. One half of the 400 (= 200) must be laid out under all circumstances by that section of IIC which has accumulated 200 in money as the wear and tear value and which has to reconvert this money into the natural form of its fixed capital.
Just as constant capital value, variable capital value, and surplus value — into which the value of commodity capital II as well as I is divisible — may be represented by special proportional shares of commodities II and I respectively, so may, within the value of the constant capital itself, that portion of the value which is not yet to be converted into the natural form of the fixed capital, but is rather to be gradually accumulated for the time being in the form of money. A certain quantity of commodities II (in the present case therefore one half of the remainder = 200) is here only a vehicle of this wear and tear value, which has to be precipitated in money by means of exchange. (The first section of capitalists II, which renews fixed capital in natura, may already have realised in this way — with the wear and tear part of the mass of commodities of which here only the re-
[52]< These figures again do not coincide with those previously assumed. But this is immaterial since it is merely a question of proportions.— F.E.
mainder still figures — a part of its wear and tear value, but it still has to realise 200 in money.)
As for the second half ( = 200) of the £400 thrown into circulation by II in this final operation, it buys circulating components of constant capital from I. A portion of these £200 may be thrown into circulation by both sections of II, or only by the one which does not renew its fixed component of value in natura.
With these £400 there is thus extracted from I: 1) commodities amounting to £200, consisting only of elements of fixed capital; 2) commodities amounting to £200, replacing only natural elements of the circulating portion of the constant capital of II. So I has sold its entire annual commodity product, so far as it is to be sold to II; but the value of one-fifth of it, £400, is now held by I in the form of money. This money however is surplus value converted into money which must be spent as revenue for articles of consumption. Thus I buys with these £400 II's entire commodity value = 400. Hence this money flows back to II by setting its commodities in motion.
We shall now suppose three cases, in which we shall call the section of capitalists II which replaces its fixed capital in natura "section 1", and that section which stores up depreciation value of fixed capital in money form, "section 2". The three cases are the following: a) that a share of the 400 still existing with II as a remnant in the shape of commodities must replace certain shares of the circulating parts of the constant capital for sections 1 and 2 (say, lj[2] for each); b) that section 1 has already sold all its commodities, while section 2 still has to sell 400; c) that section 2 has sold all but the 200 which are the bearers of the depreciation value.
Then we have the following distributions: a) Of the commodity value = 400c, still in the hands of II, section 1 holds 100 and section 2 — 300; 200 out of the 300 represent depreciation. In that case section 1 originally laid out 300 of the £400 in money now returned by I to get commodities from II, namely 200 in money, for which it secured elements of fixed capital in natura from I, and 100 in money for the promotion of its exchange of commodities with I. Section 2 on the other hand advanced only '^ of the 400, i. e., 100, likewise for the promotion of its commodity exchange with I.
Section 1, then, advanced 300, and section 2 — 100 of the 400 in money.
Of these 400 there return however: To section 1 — 100, i. e., only '/[3] of the money advanced by it. But it has in place of the other [2]/[3] a renewed fixed capital to the value of 200. Section 1 has given money to I for this element of fixed capital to the value of 200, but no subsequent commodities. So far as the 200 in money are concerned, section 1 confronts department I only as buyer, but not later on as seller. This money cannot therefore return to section 1 ; otherwise it would have received the elements of fixed capital from I as a gift.
With reference to the last third of the money advanced by it, section 1 first acted as a buyer of circulating constituent parts of its constant capital. With the same money I buys from it the remainder of its commodities worth 100. This money, then, flows back to it (section 1 of department II) because it acts as a vendor of commodities directly after having acted as a buyer. If this money did not return, then II (section 1) would have given to I, for commodities amounting to 100, first 100 in money, and then into the bargain, 100 in commodities, i.e., II would have given away its commodities to I as a present.
On the other hand section 2, which laid out 100 in money, receives back 300 in money: 100 because first as a buyer it threw 100 in money into circulation, and receives them back as a seller; 200, because it functions only as a seller of commodities to that amount, but not as a buyer. Hence the money cannot flow back to I. The fixed capital depreciation is thus balanced by the money thrown into circulation by II (section 1) in the purchase of elements of fixed capital. But it reaches the hands of section 2 not as money of section 1, but as money belonging to class I.
b) On this assumption the remainder of IIC is so distributed that section 1 has 200 in money and section 2 has 400 in commodities.
Section 1 has sold all of its commodities, but 200 in money are a transformed shape of the fixed component part of its constant capital which it has to renew in natura. Hence it acts here only as a buyer and receives instead of its money commodity I to the same value in natural elements of its fixed capital. Section 2 has to throw only £200 into circulation, as a maximum (if I does not advance any money for commodity exchange between I and II), since for half of its commodity value it is only a seller to I, not a buyer from I.
There return to section 2 from the circulation £400: 200, because it ''as advanced them as a buyer and receives them back as a seller of
1 in commodities; 200, because it sells commodities to the value of to I without obtaining an equivalent in commodities from I.
c) Section 1 has 200 in money and 200c in commodities. Section 2 has 200c (d) in commodities.
On this supposition section 2 does not have any advance to make in money, because vis-à-vis I it no longer acts at all as buyer but only as seller, hence has to wait until someone buys from it.
Section 1 advances £400 in money: 200 for mutual commodity exchange with I, 200 as mere buyer from I. With the last £200 in money it purchases the elements of fixed capital.
With £200 in money I buys from section 1 commodities for 200, so that the latter thus recovers the £200 in money it had advanced for this commodity exchange. And I buys with the other £200, which it has likewise received from section 1, commodities to the value of 200 from section 2, whereby the latter's wear and tear of fixed capital is precipitated in the form of money.
The matter is not altered in the least if it is assumed that, in case c), class I instead of II (section 1) advances the 200 in money to promote the exchange of the existing commodities. If I buys in that event first 200 in commodities from II, section 2, on the assumption that this section has only this commodity remnant left to sell — then the £200 do not return to I, since II, section 2, does not act again as buyer. But II, section 1, has in that case £200 in money to spend in buying and 200 in commodities for exchange purposes, thus making a total of 400 for trading with I. £200 in money then return to I from II, section 1. If I again lays them out in the purchase of 200 in commodities from II, section 1, they return to I as soon as II, section 1, takes the second half of the 400 in commodities ofTI's hands. Section 1 (II) has spent £200 in money as a mere buyer of elements of fixed capital; they therefore do not return to it, but serve to turn the 200c, the commodity remnant of II, section 2, into money, while the £200, the money laid out by I for the exchange of commodities, return to I via II, section 1, not via II, section 2. In the place of its commodities of 400 there has returned to it a commodity equivalent amounting to 400; the £200 in money advanced by it for the exchange of 800 in commodities have likewise returned to it. Everything is therefore all right.
The difficulty encountered in the exchange:
I. l,000v + 1,000,
v has been reduced to the difficulty in exchanging II. 2,000c remainders:
1 400s. II. (1) 200 in money + 200c in commodities + (2) 200c in commodities. Or, to make the matter still clearer:
I. 200s + 200s. II. (1) 200 in money + 200c in commodities + (2) 200c in commodities.
Since in II, section 1, 200c in commodities are exchanged for 200 Is (in commodities) and since all the money circulating in this exchange of 400 in commodities between I and II returns to him who advanced it, I or II, this money, being an element of the exchange between 1 and II, is actually not an element of the problem which is troubling us here. Or, to present it differently: Supposing in the exchange between 200 Is (commodities) and 200 IIC (commodities of II, section 1) the money functions as a means of payment, not as a means of purchase and therefore also not as a "medium of circulation" in the strict-est sense of the words. It is then clear, since the commodities 200 Is and 200 IIC (section 1) are equal in magnitude of value, that means of production worth 200 are exchanged for articles of consumption worth 200, that money functions here only ideally, and that neither side really has to throw any money into circulation for the payment of any balance. Hence the problem presents itself in its pure form only when we strike off on both sides, I and II, the commodities 200 Is and their equivalent, the commodities 200 IIC (section 1).
After the elimination of these two amounts of commodities of equal value (I and II), which balance each other, there is left for exchange a remainder in which the problem evinces its pure form, namely: I. 200s in commodities. II. (1) 200c in money plus (2) 200c in commodities. It is evident here that II, section 1, buys with 200 in money the component parts of its fixed capital, 200 Is. The fixed capital of II, section 1, is thereby renewed in natura, and the surplus value of I, worth 200, is converted from the commodity form (means of production, or, more precisely, elements of fixed capital) into the money form. With this money I buys articles of consumption from II, section 2, and the result for II is that for section 1 a fixed component part of its constant capital has been renewed in natura, and that for section 2 another component part (which compensates for the depreciation of its fixed capital) has been precipitated in money form. And this continues every year until this last component part, too, has to be renewed in natura.
The condition precedent is here evidently that this fixed component part of constant capital II, which is reconverted into money to the full extent of its value and therefore must be renewed in natura each year (section 1), should be equal to the annual depreciation of the other fixed component part of constant capital II, which continues to function in its old natural form and whose wear and tear, depreciation in value, which it transfers to the commodities in whose production it is engaged, is first to be compensated in money. Such a balance would seem to be a law of reproduction on the same scale, which means in other words that in class I, which puts out the means of production, the proportional division of labour must remain unchanged, since it produces on the one hand circulating and on the other fixed component parts of the constant capital of department II.
Before we analyse this more closely we must see what turn the matter takes if the remainder of IIC (1) is not equal to the remainder of IIC (2), and may be larger or smaller. Let us study the two cases one after the other.
F i r s t C a s e
I. 200s. II. (1) 220c (in money) + (2) 200c (in commodities). In this case IIC (1) buys with £200 in money the commodities 200 Is, and I buys with the same money the commodities 200 IIC (2), i. e., that portion of the fixed capital which is to be precipitated in money.This portion is thus converted into money. But 20 IIC (1) in money cannot be reconverted into fixed capital in natura.
It seems this misfortune can be remedied by setting the remainder of Is at 220 instead of at 200, so that only 1,780 instead of 1,800 of the 2,000 I would be disposed of by former exchange. We should then have:
I. 220s. II. (1) 220c (in money) + (2) 200c (in commodities). IIC, section 1, buys with £220 in money the 220 Is and I buys then with £200 the 200 IIC (2) in commodities. But now £20 in money remain on the side of I, a portion of surplus value which it can hold on to only in the form of money, without being able to spend it for articles of consumption. The difficulty is thus merely transferred from IIC, section 1, to Is.
Let us now assume on the other hand that IIC, section 1, is smaller than IIC, section 2; then we have:
S e c o n d C a s e
I. 200s (in commodities). II. (1) 180t. (in money) + (2) 200c (in commodities). With £180 in money II (section 1) buys commodities, 180 Is. With this money I buys commodities of the same value from II (section 2), hence 180 IIt (2). There remain 20 Is unsaleable on one side, and also 20 IIC (2) on the other- commodities worth 40, not convertible into money.
It would not help us to make the remainder of I equal to 180. True, no surplus would then be left in I, but now as before an excess of 20 would remain in IIC (section 2), unsaleable, inconvertible into money.
In the first case, where II (1) is greater than II (2), there remains on the side of IIC (1) an excess in money not reconvertible into fixed capital; or, if the remainder Is is assumed to be equal to IIC (1), there remains on the side of Is the same excess in money, not convertible into articles of consumption.
In the second case, where IIr (1) is smaller than IIC (2), there remains a money deficit on the side of 200 Is and IIC (2), and an equal excess of commodities on both sides, or, if the remainder of Is is assumed to be equal to IIt (1), there remains a money deficit and an excess of commodities on the side of IIt (2).
If we assume the remainders of Is always to be equal to IIC (1) — since production is determined by orders and reproduction is not altered in any way if one year there is a greater output of fixed component parts and the next a greater output of circulating component parts of constant capitals II and I — then in the first case Is can be reconverted into articles of consumption only if I buys with it a portion of the surplus value of II and II accumulates it in money instead of consuming it; in the second case matters can be remedied only if I spends the money itself, an assumption we have already rejected.
Endnotes
[52] Marx copied out passages from the book by W. Roscher, System der Volkswirtschaft. Band I: Die Grundlagen der Nationalökonomie, Stuttgart und Augsburg, 1858, in Notebook VII, which he compiled in London between 1859 and 1863.— 371
[2] Engels did not have time to publish Marx's Theories of Surplus Value as the fourth volume of Capital. It was first published in 1905-10 by Karl Kautsky. In 1954-61 and 1962-64, the Institute of Marxism-Leninism of the CC CPSU in Moscow published in Russian a new edition of Theories... which differed from that of Kautsky. In 1956-62 this Russian edition was used by the Institute of Marxism-Leninism of the CC SUPG as the basis for the publication of Theories... in German. In the present edition Theories of Surplus Value is published, according to MEGA 2, Abt. II, Bd. 3, Berlin, 1976-82, as part of the Economic Manuscript of 1861-63 (see present edition, vols 30-34).— 6
[3] From the numerous notebooks compiled by Marx in the period indicated by Engels, the Institute of Marxism-Leninism of the CC CPSU published nearly all the passages from Russian sources (see Marx-Engels Archives, vols XI-XII, XVI, Moscow, 1948, 1952, 1955, 1982) as well as Mathematical Manuscripts (Moscow, 1968). Marx's notebooks are published in full in Section IV of Marx-Engels Gesamtausgabe.— 7